Judgment creditors relied on duty-to-defend cases, which did not apply: Court of King’s Bench
The Alberta Court of King’s Bench saw no basis to award solicitor-client costs or otherwise enhanced costs to judgment creditors who prevailed in an action against two insurance companies that unsuccessfully alleged that a claim fell beyond their policies’ coverage.
In Tragger v Intact Insurance Company, 2026 ABKB 112, the plaintiffs hired a contractor to supply and install stone siding to two buildings. The contractor supplied the siding, while a subcontractor it hired installed it in 2007.
In 2014, material portions of the siding started to delaminate. As the plaintiffs had to remove and replace all of the siding, they sued both companies in summary judgment proceedings.
An applications judge found contractual breach by the contractor and faulty workmanship, constituting negligence, by the subcontractor. The judge ordered the companies to jointly and severally pay the plaintiffs about $310,000, with prejudgment interest and costs.
The plaintiffs, as judgment creditors, could not collect any portion of the judgment award. They attempted to recover the amount from the contractor’s commercial general liability insurers under s. 534 of Alberta’s Insurance Act, 2000.
The contractor notified its two insurers of the plaintiffs’ claim. Both insurers – the defendants in this case, Intact Insurance Company and Royal & Sun Alliance Insurance Company of Canada – advised that the claim fell beyond the scope of insurance coverage.
Rather than challenging the insurers’ denials, the contractor and the subcontractor defended themselves in the liability action.
The Court of King’s Bench determined that some of the policies issued by the contractor’s two insurers covered the plaintiffs’ losses. The court found the plaintiffs entitled to costs. The plaintiffs sought solicitor-client costs.
Full indemnity costs denied
For the coverage action, the Court of King’s Bench of Alberta awarded the plaintiffs $38,000 in lump sum costs, all inclusive.
The court noted that this amount represented 40.7 percent of the plaintiffs’ claimed solicitor-client fees, assuming they were reasonable, or 50 percent of their fees if adjusted to $76,000, accounting for an approximate 20 percent reduction if their fees were excessive to that degree.
The court found full indemnity costs unwarranted. The court pointed out that the plaintiffs mainly relied on cost principles arising from duty-to-defend cases, which the court deemed distinguishable from the present proceeding.
The court explained that the present case was about the duty to indemnify, not the duty to defend. The court noted that the duty to defend was a matter between the contractor and its two insurers.
The court found that the plaintiffs failed to cite any duty-to-indemnify cases calling for full indemnity costs based on a failure to indemnify at first instance.
Moreover, even if this had been a duty-to-defend case, or if the principles from such cases had been relevant, the court said it would refuse to award full indemnity costs.
The court preferred the approach to duty-to-defend costs in West Van Holdings Ltd v Economical Mutual Insurance Co, 2019 BCCA 110, which found “no principled reason to award costs in a duty to defend case in a manner different than other litigation.”
The court considered the insurers’ conduct in the “coverage or not” litigation commendable and unobjectionable. The court added that Intact Insurance cooperated and helped the matter proceed expeditiously.
The court concluded that claims of costs of judgment enforcement against the contractor and interest went beyond the scope of the current cost proceedings.
